What is an automatic stay?

One of the single most benefit of filing for bankruptcy is its inherent power of automatic stay. There is no need of filing of a separate injunction as mere filing of bankruptcy includes an injunction against all of your creditors to cease their collection, repossession or any other activity on their claims immediately. Any violations is punishable under the law. All legal proceedings against the debtor and other collection activities must cease until relief is granted by the bankruptcy court. A motion to lift stay needs to be filed by creditors in this regard. Generally speaking, a stay is limited to 30 days but it can be extended. Actions taken against the stat are void or at least voidable, even absence notice of the stay. Once an attorney has received any indication that a bankruptcy has been filed, he/she should assume the stay is in effect unless the absence of a filing has been verified by inquiry to the bankruptcy court or the PACER electronic document system. Upon receipt of notice, the creditor or its attorney is generally obligated to inform any state court in which litigation is pending of the existence of the stay.

There are some new amendments added to the Code after the 2005 amendments.

Relief from stay?
In many cases the bankruptcy court must grant relief from the stay before any litigation or any other action to collect claims from the debtor may be taken. A court fee of $150 is required, and court can grant motion to lift stay.


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